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30 January 2016
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Thailand needs to embrace ‘trading nation’ strategy, seminar hears


THAILAND should steer a new course to grow its economy through adopting a “trading nation” strategy, academic, government and business representatives agreed yesterday.

Thailand Development Research Institute (TDRI) president Somkiat Tangkitvanich yesterday suggested a shift in the private sector’s mindset and the government’s promotional methods, in a bid to transform the Kingdom from a manufacturing oriented economy to a “trading nation”.

“A trading nation must not aim for the mass markets but for the niche markets that offer high value. A trading nation focuses on exporting services in parallel with physical goods and selling intangibles such as their ‘stories’ or branding,” he said.

With its manufacturing sector contributing 28 per cent of gross domestic product, Thailand is among the top three “factories of the world”, along with China and South Korea, he said.

Thailand should leverage its strengths in manufacturing to also excel in trading and commerce, as it has faced three consecutive years of negative export growth and a falling share of global foreign direct investment, Somkiat said at a TDRI seminar on the topic of “Driving the Thai Economy Through the ‘Trading Nation’ Strategy”.

Nopporn Thepsittha, chairman of the Thai National Shippers’Council (TNSC), told the conference that his organisation agreed with the “trading nation” strategy as it saw no other way for the country to tackle the problem of falling exports and to move out of the “middle-income trap”.

Thai companies have to shift from being original equipment manufacturers (OEMs) that produce by other firms’ orders, to become more demand-driven and stay closer to their customers, he said.

Education sector
The education sector must also support the trading-nation policy by being capable of producing “smart traders”.

Nopporn also urged the current military-led regime to reform the bureaucratic system while there was a chance to do so.
“I would like to see a reform of the government’s mechanisms to drive the country forward. There will be no other chance if we pass this tenure” of the current government, he said.

The TNSC chief suggested the government combine the Commerce and Industry ministries and split tourism from the Ministry of Tourism and Sports, among other recommendations.

“The structures are very confusing. The Ministry of Foreign Affairs is taking care of border trade, while the Ministry of Commerce is in charge of international trade. There are many processes that interlock with others.

“There are also so many committees. The country won’t survive with the current driving mechanisms,” he said.

Jirawat Tangkijngamwong, director of the Board of Trade of Thailand, said building brands was not feasible for every manufacturer so many could instead move towards becoming “smart OEMs” through investing in technologies and distribution channels.

He said Thailand could follow the path of Taiwan, Japan or South Korea to build product clusters led by big-brand corporations, each supported by local OEM suppliers.

“I see the way for us to create ‘bands’ rather than to have everyone be a lead vocal artist,” Jirawat said.

Pimchanok Vonkhorporn, deputy director-general of the Office of Trade Policy and Strategy, said the Commerce Ministry focused on helping the agricultural sector become more demand-driven.

“A key is to make Thai products part of the global value chains and decide how to climb up the value ladders, or to pull some products out” of competition.

“We must also not forget the local communities, which must also be strong.”


First published in The Nation on Friday, January 29, 2016